This is the Life: Reserve funds mean some taxpayers pay for services but won’t see benefit

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Lorne Eckersley is the publisher of the Creston Valley Advance.

Lorne Eckersley is the publisher of the Creston Valley Advance.

As I sat through a Town of Creston budget meeting last week, a few thoughts crossed my mind. First, thumbing through a package that included sheets on every project that town council is considering for the 2016-17 budget, I couldn’t help but think that what I have witnessed at council meetings over the years is true — the quality of information that councils get from staff has improved dramatically. It is concise and unbiased, and presented in a way that non-experts — elected representatives of the public — can digest. And senior staff are only too willing to adjust and adapt that info upon council’s request.

My second observation won’t likely sit well with either group. As finance director Steffan Klassen worked through his presentation there was considerable interest among councillors about the status of the town’s various reserve funds. Reserve funds are, essentially, savings accounts for various expenditures, designed to help cover both planned and unforeseen costs. Some reserve funds might be statutory, or required by law, and others meet other requirements. A condition of borrowing and qualifying for grants to upgrade the wastewater treatment plant was to build up the appropriate reserve fund.

Fair enough, but I couldn’t help but think about Popeye’s friend, Wimpy, as the discussion proceeded. Wimpy, readers of my vintage might recall, had a favourite saying — “I will gladly pay you Tuesday for a hamburger today.” The perpetually broke character did love his burgers. Reserve funds, I kept thinking, are the polar opposite of Wimpy’s economic plan. Think of those reserves as the taxpayer saying, “I’ll gladly pay you today for a hamburger on Tuesday.”

Years ago, under the leadership of Mayor Lela Irvine, town council initiated a policing reserve fund in anticipation of Creston going over the 5,000 mark in population and having to pay a much larger portion of its policing costs. The theory was simple — build up a fund that would help ease the sudden jump in cost. In other words, pay more taxes today so that the increase won’t seem so dramatic tomorrow.

And the plan worked. Without that fund, Creston taxpayers would have faced a huge tax increase immediately.

In our personal economies, many of us also have reserve funds, most notably in the form of retirement savings accounts. We save today so that we can supplement our government pensions upon retirement. Some have education savings plans and some have rainy day funds for emergencies. Heck, some even set aside money for vacations. But for bigger purchases like vehicles and houses, we most commonly borrow, paying for them at the same time we are getting the benefit of their use. That’s an important part of my distaste for reserve funds in general — we are paying for something today so we can pay less, or even nothing, when we are actually getting the benefit.

Think of the many, many taxpayers who for years paid into that policing reserve fund and then died or moved before we had to start paying for the service. They paid in advance for a hamburger they never got to enjoy. Someone who moved into town in the year that we went over the 5,000 mark had the blow of higher policing costs softened because others — call them Reverse Wimpys — paid today for a hamburger on Tuesday.

Local government administrators and elected officials can be forgiven for their love of reserve funds. Those funds can allow emergencies to be addressed without messing up a budget or having to borrow, the latter of which needs taxpayer approval. Easier to dip into a reserve fund than to go the public with hat in hand, asking for permission to borrow.

It took an enormous volunteer effort to convince taxpayers to borrow so we could have the beautiful Creston and District Community Complex that we enjoy today, and there was no reserve fund (unless you count fundraising efforts, which were voluntary, unlike taxes). The majority of voters expressed their willingness to pay today, and tomorrow, for a hamburger today, and tomorrow. Just as they do when they take out a car loan or a mortgage to buy a house.

I am not saying that reserve funds are fundamentally bad, or that those who like them are wrong. But I think their creation should be undertaken with the same prudence as we expect from any government spending. Call me a spend-as-I-go guy. I’m happier paying for my burger when I get it.

Lorne Eckersley is the publisher of the Creston Valley Advance.